Insurance Didn't Pay to Repair My Car After My Auto Accident. It Did This Instead

This could cause financial hardship if you aren't prepared.

Several years ago, I was involved in an auto accident that resulted in serious damage to my vehicle. The incident was not my fault, and I was able to make a claim through the other driver's auto insurance because the accident was a covered cause of loss.

I had expected insurance to pay for repairs, but that is not what happened. Here's what occurred instead.

This is what happened after the car accident

After my auto accident occurred, I had to take my car to a repair shop to assess the damage. It was ultimately determined that the costs of repairs were too substantial to be worth paying, so the insurer would not be covering the costs of fixing the car.

Instead, the insurer agreed to pay me the fair market value of my vehicle, which was quite a few years old at the time of the incident. While I was able to haggle a bit and get the insurance company to raise its offer a little bit from what the original amount was, the fair market value of the car was ultimately relatively low at the time since the car was an older one.

The insurer ended up cutting me a check for several thousand dollars based on what the car was worth at the time. Since I didn't have any other damages, thank goodness, I ended up accepting the amount as full satisfaction of the claim as there would have been nothing to gain by trying to sue the insurer or arguing further. It had paid the legitimate value of the car.

Here's the problem with what happened

Although the insurer acted fairly, there was a problem. The money it gave me was not really enough to buy a new car that I needed.

See, my car was pretty old as I mentioned, but it was my car and I had maintained it well and I trusted it. So even though it wasn't worth a whole lot of money, I wasn't planning on replacing it anytime soon since I drive my cars essentially until the wheels fall off.

Now, I could have taken the funds the insurer gave me and tried to find a comparable used car that I trusted. But since it wasn't very much money, I would have been looking at very old used cars. And this meant I would be spending a lot of money for a vehicle that would potentially have lots of unforeseen problems and that I wouldn't be able to keep for long.

Ultimately, I decided it made more sense to use some money out of pocket and buy a new car. Fortunately, I had the cash in my savings account to do that. But if that had not been the case, I might have had to settle for a cheap old used car, and hope it was as reliable as the one I'd had. Alternatively, I would have had to take out an unexpected car loan.

This is ultimately a problem anyone could find themselves dealing with if they have an older car that is totaled. And there's no real way around it, since that's how car insurance works. The best thing to do is have money saved for a new vehicle purchase in case this happens to you. That way, you won't face the stress of wondering how to afford a new car if an accident destroys your current vehicle.